CloseDevelop commercialisation and business plans
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The next step in creating your start-up is to develop a commercialisation plan and a business plan. These plans are closely linked and are often developed together.
What’s a commercialisation plan?
What’s a commercialisation plan?
The commercialisation plan details how you will develop a saleable product or service from the University IP that comes out of your research. The commercialisation plan usually ends with a prototype of the first product or service.
A valuable commercialisation plan includes a target timetable and deliverables you can measure. It addresses questions like:
- What is the target product or service you will develop from the University IP?
- What is the development status of the University technology today? Has the concept been proven in the lab? Has it been proven outside the lab? Has a prototype been built? This assessment of the technology status should include objective evidence from an expert. The expert should not be involved in the research or the proposed start-up.
- What parts of the development will be done within the University? What parts will be done by an external commercial organisation like your proposed start-up?
- What (if any) third-party IP is needed to develop the product or service?
- Who will fund the development work?
- Who will do the work?
- If new people are needed, how will you identify and recruit these people?
SMART deliverables
A successful commercialisation plan has clear definitions of each deliverable. The SMART criteria are useful when defining deliverables. These are:
- specific
- measurable
- achievable
- relevant
- time-bound.
For example, ‘We will engage with key target customers next quarter’ is not a SMART deliverable. ‘The CEO will sign non-disclosure agreements with three target customers by April 30’ is.
Deliverables usually include measurable proof that your solution solves the target problem:
- in a research setting
- significantly better than existing solutions in a research setting. This will usually include customer validation.
- significantly better than existing solutions in field trials, meaning in the environment in which the customer will use it. This will usually also include customer validation.
Like the value proposition and business model exercises, a commercialisation plan is needed for prospective founders of a start-up.
It gives you a clear understanding of:
- the steps you need to take to work out what funding, people and resources you’ll need
- what level of risk you’re taking on.
The commercialisation plan is also one of the documents the University will ask for before it considers giving you rights to use its IP.
A clear and credible plan will help increase the University’s confidence in you and your proposed start-up. It will encourage the University to support your start-up. And if you successfully execute this plan, it will help maintain the University’s confidence and support.
You can find a template for a commercialisation plan.
What’s a business plan?
What’s a business plan?
The business plan sets out in detail the financial goals of the start-up, and the plan to achieve them.
It describes how you, as founders, plan for the start-up to become profitable, and so financially self-sustaining. The business plan usually begins where the commercialisation plan ends: with a prototype of the first product or service.
The business plan includes:
- quarterly and annual analyses of expected costs and revenue, usually over five years. It shows the sources of expenses and how these expenses will be met.
- details of who will be involved. This means the start-up’s customers, suppliers, partners and in-house team.
You can more easily measure your progress against the later stages of your business plan than your progress against your commercialisation plan. This is because the metrics are simply quarterly revenue and expenses.
The business plan usually includes a discussion of your competition, for example, your customers’ current suppliers. It also includes the reasons why customers will choose your product rather than theirs.
As with the commercialisation plan, you need to develop a credible business plan. The University will ask for a credible business plan from you before giving you rights to use its IP.
You can use your completed Business Model Canvas as the basis of your business plan.
You can find a template for a business plan.
Life sciences start-ups
If you’re considering a life sciences start-up:
Your commercialisation plan can describe the steps to reach your first major venture capital funding round.
Your business plan can describe the steps from there to an exit. This is the eventual sale of your start-up.
How to test commercialisation and business plans
How to test commercialisation and business plans
Assess commercial potential describes a method to explore your start-up’s value proposition and business model. This method is based on identifying key business hypotheses and validating them through interviews. Interviews are conducted with prospective customers, their customers, suppliers, partners and industry experts.
The same method can be used to validate your commercialisation and business plans. This process will probably lead to many revisions and iterations of the canvases, and of both plans.
To get to canvases and plans with enough validation for you (and your investors) to believe in could take months or even years. It could also take hundreds of customer interviews. More relevant data leads to greater confidence in scientific results. In the same way, more data from well-conducted customer interviews leads to a more credible business plan.
Currency
It’s possible to ask for more concrete validation from potential customers as:
- you refine your hypotheses with more customer interviews
- your business plan becomes more mature.
This validation can be in the form of actions rather than words.
The Lean start-up methodology encourages start-ups to ask for some type of currency from potential customers. This is to test if they genuinely value your proposed offering. Examples of currency could include:
- introductions to other prospective interviewees
- a further meeting to discuss your proposed product or service
- visits to your start-up’s website and/or download of your white paper to find more information
- participation in a workshop arranged by you
- a signed non-disclosure agreement, to allow deeper discussion of your proposal and their business
- a letter of support, to help you raise funding
- evaluation of and feedback on a demonstration of your proposed product or service
- financial commitment, for example investment in your start-up, funding for your product development, or an advance or provisional purchase order for your product.
This validation process applies both to your potential paying customers, who can validate the target price and forecast sales volumes in your business plan, and to your prospective suppliers, who might validate some costs.
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